As 2025 comes to a close, UK businesses need to carry out a thorough end-of-year payroll review. Accurate payroll ensures HMRC compliance, avoids fines, and sets your company up for a smooth start to 2026.

This guide walks you through the essential checks every business should complete before the new year.

1. Verify and Update Employee Records

Maintaining accurate employee records is crucial for payroll compliance:

• Confirm addresses, bank details, and emergency contacts are up to date.
• Check employment status for all starters, leavers, and temporary staff.
• Update records for any pay changes, bonuses, or overtime.

 Tip: Keeping digital records makes reconciliations faster and reduces errors.

2. Reconcile Tax and National Insurance Contributions

End-of-year is the perfect time to ensure PAYE and National Insurance (NI) contributions are correct:

• Verify income tax deductions for each employee.
• Check both employer and employee NI contributions.
• Confirm any student loan or pension deductions are applied correctly.

Tip: Use payroll reports to reconcile totals against HMRC records to prevent discrepancies.

3. Review Pension Contributions

Pension auto-enrolment rules are strict, so ensure compliance:

• Make sure all eligible employees are enrolled.
• Verify that contributions meet the minimum required thresholds.
• Check for opt-outs and any mid-year changes.

4. Reconcile Payroll Reports and Payments

Reconciling payroll ensures accuracy and highlights errors:

• Compare payroll totals to your accounting records.
• Confirm bonuses, overtime, and commissions are correctly recorded.
• Address any discrepancies before submitting final reports to HMRC.

5. Prepare and Submit HMRC Year-End Forms

HMRC requires businesses to submit key year-end forms:

• P60: Provide to all employees by 31 May following the tax year.
• P11D: Report any benefits in kind provided to staff.
• FPS and EPS: Ensure Full Payment and Employer Payment Summaries are accurate.

Note: Late or inaccurate submissions can result in fines.

6. Plan Payroll Processes for 2026

End-of-year reviews are a good opportunity to improve payroll efficiency:

• Consider payroll automation or outsourcing options.
• Update payroll calendars with tax updates, holidays, and pay dates.
• Train staff on any upcoming compliance or legislative changes.

Why Conduct an End-of-Year Payroll Review?

Completing an end-of-year payroll review helps you:

• Avoid HMRC penalties and fines.
• Ensure accurate employee payments.
• Prepare for audits and maintain clean records.
• Streamline payroll for a smooth start to 2026.

Need Expert Payroll Support in the UK?

Our payroll bureau helps businesses review, reconcile, and submit year-end payroll reports accurately and efficiently. Don’t risk fines or mistakes—contact us today to make your 2026 payroll stress-free.